Cryptocurrencies have seen plummeting prices as a crash continues across several major coins over the past few days.
Ethereum, Binance’s BNB, Solana, Cardano and XRP are among the hardest hit, with $2.1 trillion of value lost in the crypto market.
What are the cryptocurrency price drops?
Several major cryptocurrencies saw their values drop rapidly over the last 24 hours.
Bitcoin was worth $43,058.75 on Thursday morning but dropped to a low of $42,496 on Friday.
That constitutes a 40 percent drop from its all-time high set in November at almost $70,000, with a downward trend now picking up even greater speed.
Similarly, Ethereum dropped 12 percent to $3,411.92 and Solana fell 12% to $148.58.
What’s causing bitcoin and crypto price drops?
One of the major factors is that the Federal Reserve has hinted that there could be a potential quick rise in interest rates this year.
Minutes from a December meeting of officials discussed the possibility to shrink the $8.3 trillion balance sheet.
That sparked selloffs in both crypto and stock markets, with the Nasdaq losing more than three percent in its sharpest drop since March.
With rising interest rates, volatile investments like cryptocurrencies become less attractive when compared to government bonds due to the low levels of income generated.
These factors, combined with overall market uncertainty caused by the Omicron variant of COVID-19, has led to great uncertainty.
It adds to ongoing concerns over the risk involved in cryptocurrencies, and bitcoin in particular.
Many short-term holders who see these reports will be quick to sell up and instead invest in government bonds, rather than cryptocurrencies.